Hess Falls 11% on Stock Sales to Raise $1.43 Billion
(Bloomberg) -- Hess Corp., the New York-based oil and gas producer said it will raise $1.43 billion from sales of stock and depositary shares after reporting its first annual loss since 2002.
The offer includes 25 million shares of common stock priced at $39 each, and 10 million depositary shares at $50 a piece, Hess said in a statementFriday before the start of regular trading in New York. The depositary shares represent stakes in mandatory convertible stock.
Hess fell 10 percent to $38.91 at 9:32 a.m. in New York after earlier dropping 11 percent.
Proceeds of the concurrent offerings will be used to fund long-term capital needs and other corporate purposes, Hess said. The company announced a $2.5 billion capital spending plan Jan. 27. Hess was expected to burn $1.1 billion of cash this year, according to the average of eight analyst estimates compiled by Bloomberg.
Last month, Hess posted a $3.06 billion lossfor 2015 after crude fell 30 percent last year, crimping revenue and forcing it to reduce estimates of proved oil and gas reserves. West Texas Intermediate, the U.S. benchmark, has declined 14 percent this year to around $32 a barrel.
Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are managing the sales, expected to close Feb. 10, according to the statement. They have the option to buy 3.75 million additional shares of common stock and 1.5 million additional depositary shares within 30 days.
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